Involuntary separation pay calculator

How involuntary separation pay is calculated

Under 10 U.S.C. 1174, members who are involuntarily separated after at least 6 but fewer than 20 years of active service may receive separation pay. Your service decides whether you get full pay, half pay, or none, based on the reason for separation.

Worked example (DoD FMR Vol. 7A, Ch. 35): an E-5 with 8 years and $3,497.70 monthly basic pay: 0.10 × (12 × $3,497.70) × 8 = $33,577.92 full separation pay. Half would be $16,788.96.

Requirements to know about

• You generally must agree in writing to serve at least 3 years in the Ready Reserve.
• Members separating at their own request, during an initial enlistment or obligated period, or eligible for retired pay generally do not qualify.
• Time you were already paid separation, severance, or readjustment pay for does not count again.

Taxes and VA recoupment

Separation pay is taxable. It is usually withheld at the 22% federal flat rate for supplemental wages, plus state tax. If you later receive VA disability compensation, VA withholds your monthly payments until it has recovered the separation pay minus the federal tax that was withheld (10 U.S.C. 1174(h)(2)). There are exceptions, such as when the disability came from a later period of service.

Sources and data year

Rules: 10 U.S.C. 1174 and DoD FMR Vol. 7A Ch. 35, as of October 2026.

• 10 U.S.C. 1174: Separation pay upon involuntary discharge — formula, fractional years, VA recoupment
• DoD FMR Volume 7A, Chapter 35: Separation pay — worked example, computation rules
• DFAS: Military pay tables — 2026 basic pay
• IRS Publication 15: supplemental wage withholding — 22% flat rate